MATTHEWS, N.C., Aug. 27 /PRNewswire/ -- PCA International, Inc.
(Nasdaq: PCAI), reported sales for its second quarter ended August 3, 1997,
increased 51.5 percent to $47.1 million from $31.1 million in the comparable
quarter of the prior year. The Company reported a net loss in the quarter of
$1.6 million, or a loss of $0.19 per share, compared to net income of $0.2
million or $0.03 per share in the 1996 second quarter. Second quarter
results include the expected costs and expenses to complete the American
Studios integration and digital studio conversion initiatives, as well
as the expenses related to the closing of under-performing studios in the
period. Interest expense of $1.7 million and amortization of intangible
assets expense of $0.5 million related to the American Studios acquisition are
also included in the second quarter results.
Sales for the first six months increased by 57.5 percent to $105.8 million
from $67.2 million in the corresponding period one year ago. The Company
reported a net loss for the 1997 six months of $1.0 million, or a loss of
$0.12 per share, versus net income of $1.4 million, or $0.17 per share, in the
1996 six month period. Interest expense of $3.3 million and the amortization
of intangible assets expense of $1.0 million, both related to the acquisition
of American Studios are also included in the six month results.
During the second quarter, the Company discontinued its pilot program in
PETsMART stores and closed 114 PETsMART studios in the United States and
Canada. Seventy-six new portrait studios have been opened thus far in 1997
and the Company now operates 1,980 fully digital studios domestically and
internationally: 1,005 in Wal-Mart stores and 975 in Kmart stores.
"We accomplished several important initiatives in the quarter which
strategically improved the quality of our studio asset base in both Wal-Mart
and Kmart going forward," said John Grosso, president and chief executive
officer. "The fiscal 1997 second quarter operating losses were in-line with
our expectations, and due primarily to significant planned investments and
expenditures related to the American Studios acquisition and digital studio
conversion program. Going into the second half of our fiscal year and the
critical holiday season, we are well positioned with our strengthened studio
channel fully equipped with our digital imaging technology. We believe our
transformed studio base will enable PCA to deliver measurable value to
shareholders in terms of increased earnings, improved operating margins, and
strong cash flow."
The Company's Board of Directors also announced today a cash dividend of
$0.07 per share, payable October 7, 1997, for shareholders of record as
of September 15, 1997.
PCA is the largest operator of discount retail portrait photography
studios in North America. The Company operates 1,980 permanent portrait
studios within Kmart and Wal-Mart stores and supercenters. PCA also operates
traveling promotions in more than 1,350 Wal-Mart locations and offers on-site
photography services to churches, day care facilities, and other institutions.
The Company's studios are located throughout the United States, Canada,
Mexico, Puerto Rico and in South America.
PCA INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 3, February 2,
ASSETS: 1997 1997
Current Assets:
Cash and cash equivalents $2,454,931 $1,536,234
Other current assets 26,825,319 25,464,269
Total Current Assets 29,280,250 27,000,503
Net Property and Equipment 57,795,708 58,264,560
Intangible Assets 61,799,314 60,256,854
Other Assets 2,711,103 1,139,305
TOTAL ASSETS $151,586,375 $146,661,222
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Short-term borrowings $ 13,500,000 $ -
Current portion of long-term debt 2,500,000 -
Accounts payable-trade 17,773,213 19,799,067
Other current liabilities 26,496,631 29,672,985
Total Current Liabilities 60,269,844 49,472,052
Long-Term Debt 52,034,950 58,679,770
Other Liabilities 4,451,432 4,868,660
Shareholders' Equity 34,830,149 33,640,740
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $151,586,375 $146,661,222
PCA INTERNATIONAL, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
August 3, July 28, August 3, July 28,
1997 1996 1997 1996
SALES $47,136,830 $31,116,836 $105,828,639 $67,204,822
COSTS AND EXPENSES:
Advertising and
promotional costs 3,662,180 3,430,743 7,976,080 7,064,532
Costs of photographic
sales 18,700,959 11,346,407 40,495,617 23,250,809
Store commissions and selling
costs 17,396,766 10,565,958 36,289,128 22,313,324
General and administrative
expenses 8,590,881 5,373,681 18,767,293 12,164,921
Amortization of
intangibles 508,837 - 964,575 -
Total costs and
expenses 48,859,623 30,716,789 104,492,693 64,793,586
INCOME (LOSS) FROM
OPERATIONS (1,722,793) 400,047 1,335,946 2,411,236
Interest expense, net 1,651,113 16,760 3,270,496 35,307
INCOME (LOSS) BEFORE INCOME
TAXES (3,373,906) 383,287 (1,934,550) 2,375,929
INCOME TAX PROVISION
(BENEFIT) (1,734,286) 150,990 (938,256) 1,004,854
NET INCOME (LOSS) $(1,639,620) $232,297 $(996,294) $1,371,075
WEIGHTED AVERAGE NUMBER OF COMMON SHARES:
Primary 8,446,136 8,058,625 8,290,047 7,963,550
Fully Diluted 8,579,629 8,069,996 8,528,643 8,127,361
PRIMARY AND FULLY DILUTED EARNINGS PER
COMMON SHARE:
Net Income (Loss) $(0.19) $0.03 $(0.12) $0.17
CASH DIVIDENDS PER COMMON
SHARE $0.07 $0.07 $0.07 $0.14
See Condensed Notes to Consolidated Financial Statements.
SOURCE PCA International, Inc.
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CONTACT:
Jean Veatch, Director, Investor Relations and
Corporate Communications, PCA International, Inc., 704-847-8011
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